Social Implications of a
Computerized Society
Lecture 5
Instructor: Oliver Schulte
Simon Fraser University
What We Will Cover
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The Impact on Employment
The Work Environment
Employee Crime
Employee Monitoring
Concerns
• The introduction of computers in the workplace generated many
fears
– Mass unemployment due to increased efficiency
– The need for increased skill and training widens the earning
gap
• New trends still generating fears
– Offshoring of jobs will lead to mass unemployment
Offshoring company, Lou Dobbs on outsourcing
– Employers use of technology to monitor their employees
Example: Honeywell installs Encase software to monitor
10,000+ employee computers (copies of files, e-mail, etc.)
Discussion Question
• Are you worried about the effect of
offshoring in our own job prospects?
• Should be government do something to
protect jobs for Canadians, e.g., require
Canadian companies to “hire
Canadian”?
The Impact on Employment
Discussion Questions
• What jobs have been eliminated due to
technology?
• What jobs that were once considered highskill jobs are now low-skill due to technology?
• What new jobs have been created because
of technology?
Economic View of New
Technology: Existing Jobs
• A successful technology eliminates or reduces some jobs.
– Example: milking machines reduce need for milk hands.
– Computers have reduced the need for telephone operators,
meter readers, mid-level managers.
• Old industries/services: Technology leads to productivity gains.
– Productivity = output/time.
– Basic decision for using productivity gain as a community:
work less for same wealth, work the same for more wealth.
• Individuals may lose jobs (e.g., milk hands). Economists’
answer:
– retrain them to do jobs that are needed.
– Temporary “transfer” of wealth to laid-off workers.
– Question: does that happen enough in actual politics?
– Question: What if the job is more than a way to earn money,
e.g. a way of life (logging in B.C., fishermen in Quebec).
– “The market does not respect lifestyles.”
Job Losses that may have
come from computer
technology
• Number of bank tellers dropped by 37%
between ‘83 and ‘93.
• Telephone operators dropped 60%
between ‘70 and 2002. While longdistance callls increased from 9.8 bill to
94.9 bill.
• Digital cameras: Kodak laid off
thousands of employees.
Economic View of New
Technology: New Jobs
• New industries arise
– Internet
– Cellular communications.
• Lower prices increase demand and create
jobs
– Music industry changed from serving the
wealthy to serving the masses, employing
more than just musicians.
Job Gains that may have
come from computer
technology
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1996: 100,000 new internet-related jobs. 1
1997: 109,000 jobs in cell phone industry.
1998: 242,000 jobs in chip-making industry.
2004: 10.5 mill jobs in U.S. IT.
2005: $1 trill spent on IT worldwide.
Flexibility and Job Churn
• Between 1993 and 2002, roughly 30 mill
U.S. jobs were opened and closed each
year.
• There is a net increase of about 18 mill
jobs.
• Mark of a flexible economy.
Discussion Question
• Do you think there is too much flexibility
in our economy (too much “hire and
fire”)? Or too little?
Winners and Losers from
New Technology
• Technology or Capital Owners win: Can
produce the same or more with lower
costs.
• Workers gaining new job opportunities
(e.g., in IT) win.
• Customers benefit from lower prices.
• Workers losing their job lose  EI.
Employment Trends: Are We
Earning Less?
• Are we earning less?
– Since the 1970s, wages decreased but fringe
benefits increased
– Decrease in take-home pay may be due to other
factors, e.g.
• increased taxes
• Rising income inequality
• Globalization: more competition for workers.
• Decrease of unionization, especially in U.S.
– Purchasing power increases as prices fall.
• Price fall mostly due to cheaper imports (e.g.,
China).
• Housing prices have been going up.
Employment Trends: Are
We Working More?
• Are we working more?
– People work fewer hours since the Industrial Revolution.
– But the average American worker puts in 200 hours more
per year than in 1973 (J. Schor).
– Tax law, benefits encourage overtime work rather than hiring
additional workers.
– One-earner per household used to be sufficient for middle
class.
– See recent sleep study.
Free time the major concern in U.s. workers.
– Is e-mail causing work stress?
The Impact of Technology
Unemployment rates fluctuate
• Growth of computers has been steady, while unemployment
has fluctuated widely. Hard to argue for connection one way or
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another.
Information technology supports globalization, offshoring (see next
slide).
Changing Skill Levels:
• The new jobs created from computers are different from the jobs
eliminated
• New jobs such as computer engineer and system analyst jobs
require a college degree, whereas jobs such as bank tellers,
customer service representatives and clerks do not
• Companies are more willing to hire people without specific skills
when they can train new people quickly and use automated
support systems
• The computer can be a “cognitive prothesis”.
The Impact on
Employment
A Global Workforce:
• Outsourcing - phenomenon where a company pays
another company to build parts for its products or
services instead of performing those tasks itself
• Offshoring - the practice of moving business
processes or services to another country, especially
overseas, to reduce costs
• Inshoring - when another company employs
thousands of people in the U.S. (e.g. offshoring for a
German company means inshoring for U.S.)
• Almost 5% of U.S. workers are employed by foreign
companies
The Productivity Paradox
• Solow (1987): “You can see the computer age everywhere but in
the productivity statistics”.
• In the 1980s, IT investment grew 24%/year---productivity
declined!
• Many possible explanations offered - can you think of some?
The Productivity Paradox
20 years later
• Productivity Growth in 2001: 5.4%, 2002: 5.4%, 2003:
8.1%.
• Possible Explanation: businesses have finally
become more efficient through IT use.
• Alternative explanation: how is output/time
measured?
– Time: U.S gvt says financial services workers work
35.5 hours as in 1988. Stanley Morgan: “That’s
absurd---most information workers can work
around the clock.”
– Output: Hard to measure in services. Gvt uses
workers’ compensation instead.
• Alternative explanation: using cheap overseas labour.
New Job Market
Dynamics
Getting a Job:
• Learning about jobs and companies
– Online company histories and annual reports
– Job search and resume sites (monster.ca)
– Online training
• Learning about applicants and employees
– Search online newsgroups and social networks
– Hire data-collection agencies such as ChoicePoint
– Prospective employees may craft an online profile
and presence geared towards the job they want
The Work Environment
Job Dispersal and Telecommuting:
• Telecommuting
– Working at home using a computer
electronically linked to one's place of
employment
– Mobile office using a laptop, working out of
your car or at customer locations
– Fulltime and part-time telecommuting
Telecommuting: Benefits
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Reduces overhead for employers
Reduces need for large offices
Employees are more productive, satisfied, and loyal
Reduces traffic congestion, pollution, gasoline use,
and stress
• Reduces expenses for commuting and money spent
on work clothes
• Allows work to continue after blizzards, hurricanes,
etc.
• Promoted by many people, CIO Insight
Telecommuting: Problems
• Employers see resentment from those who
have to work at the office
• For some telecommuting employees,
corporation loyalty weakens
• Odd work hours
• Cost for office space has shifted to the
employee
• Security risks when work and personal
activities reside on the same computer
• Distractions
Discussion Question
• Do you want to telecommute? How
much? Why?
Changes in Business
Structure
Changing Structure of Business:
• Average Decline in Size (1975-1985): 20%.
• Increase in smaller businesses and
independent consultants (‘information
entrepreneurs’).
• Correlation between IT use and small size.
• ‘Mom and pop multi-nationals’, small
businesses on the Web
• Growth of large, multi-national corporations
• Not all changes due to technology, could also
be tax law.
The Work Environment
Discussion Questions
• How has technology made entrepreneurship
easier? Harder?
Employee Crime
• Embezzlement - fraudulent appropriation of
property by a person to whom it has been
entrusted
• Trusted employees have stolen millions of
dollars
• Angry fired employees sabotage company
systems
• Logic bomb - software that destroys critical
files (payroll and inventory records) after
employee leaves
• Theft by employees = $17.6 bill retail losses
in 2005.
Employee Monitoring
Background:
• Monitoring is not new
– Early monitoring was mostly ‘blue-collar’
(factory) and ‘pink-collar’ (telephone and
clerical) jobs
– Time-clocks and logs
– Output counts at the end of the day
– Bosses patrolled the aisles watching
workers
Employee Monitoring
(cont.)
Data Entry, Phone Work, and Retail:
• Data entry
– Key stroke quotas
– Encourage competition
– Beep when workers pause
• Phone work
– Number and duration of calls
– Idle time between calls
– Randomly listen in on calls
• Retail
– Surveillance to reduce theft by employees
Employee Monitoring
(cont.)
E-Mail, Blogging, and Web Use:
• E-mail and voice mail at work
– Employees often assume passwords mean they
are private
– Roughly half of major companies in the U.S.
monitor or search employee e-mail, voice mail, or
computer files.
– Supported by software like Encase.
– Most companies monitor infrequently, some
routinely intercept all e-mail.
– Over half have fired employees for e-mail/web
use.
– Microsoft: access private, password-protected
folders on work computers.
Employee Monitoring:
legal aspects
E-Mail, Blogging, and Web Use (cont.):
• Law and cases
– Electronic Communications Privacy Act
(ECPA) prohibits interception of e-mail and
reading stored e-mail without a court order,
but makes an exception for business
systems
– Courts put heavy weight on the fact that
computers, mail, and phone systems are
owned by the employer who provides them
for business purposes
Employee Monitoring:
Labour Relations
E-Mail, Blogging, and Web Use (cont.):
• Law and cases (cont.)
– Courts have ruled against monitoring done
to snoop on personal and union activities
or to track down whistle blowers
– Many employers have privacy policies
regarding e-mail and voice mail
– The B.C. Labour Relations Board sets
rules and decides cases about workeremployer relations
Employee Monitoring
(cont.)
E-Mail, Blogging, and Web Use (cont.):
• Some companies block specific sites (e.g.
adult content, sports sites, job search sites,
social-network sites)
• Employees spend time on non-work activities
on the Web
• Concerns over security threats such as
viruses and other malicious software
• Concerns about inappropriate activities by
employees (e.g., harassment, unprofessional
comment) - see NYT article.
Employee Monitoring
Discussion Questions
• How much privacy is reasonable for an
employee to expect in the workplace?
• Under what circumstances is it appropriate
for an employer to read an employee's email?